What is a burial insurance policy? How is it different than a normal life insurance policy?
These two questions come up all the time when we talk to a new client about their life insurance options. Understanding why you might need this type of final expense policy is the first step to knowing whether it is right for you.
The average funeral cost has skyrocketed in the past few decades. For a typical funeral, you can expect to shovel out (pun intended) around $10,000 depending on where you live and your burial preferences.
There are countless stories of families that have inherited thousands of dollars of debt after their loved one passed away, but you don’t have to be one of those families.
Providing for your family after you’re in the ground could be easier than you think.
What is Burial Insurance?
There are a lot of misconceptions about burial insurance plans and how they work, but we are here to help clear all of those up. Simply put, burial insurance is a tool to help your loved ones pay for all of your final expenses after your death. While it’s often referred to as a separate produce, burial insurance policies are basically very small life insurance policies that are used to cover any expenses left after someone dies. These expenses could be the funeral, hospital bills, or credit card bills.
Burial life insurance (sometimes called “funeral insurance”) is an excellent and affordable option for helping provide for your family after you passing, even though many Americans see these policies as a waste of money. Burial insurance policies are sold by dozens of large life insurance companies across the U.S. They often have lower coverage limits, normally around $10,000, but they can range anywhere from a small $5,000 policy to a $20,000 policy. Burial plans are easy to apply to and often don’t require any medical exam.
Just about every insurance company has a minimum age limit you must be older than to purchase a burial insurance policy, normally this is around 50 (some companies have limits as low as 40). Similarly, every insurance company will have a maximum age that they will sell you a policy; normally you can’t be older than 80 or 85. If you have a policy, you can keep the policy until you are 100 years old (hopefully, we all reach that point).
Burial insurance is often confused with a prepaid funeral, but there are a few key differences between the two plans. Prepaid funerals are funded directly through the funeral home of your choice while funeral insurance is bought through an insurance agency. With prepaying for a funeral, you can only use that particular funeral home, with burial policies you can use whichever location works best.
The beneficiary of the burial insurance plan can use the payout to cover any expenses necessary, but a prepaid funeral can overpay for the cost of the burial and related expenses. Many people choose to go with a burial policy instead of a prepaid funeral just in case there are any expenses they may have forgotten about.
Why buy a Funeral Insurance Plan?
One of the most frequent questions regarding these policies is, “what’s the point of a burial insurance policy”? Well, the answer is simple. Nobody wants to leave their loved ones saddled with thousands of dollars of debt after their passing. Between flowers, a casket, a burial plot, transportation, taxes, headstone, and more the cost of a funeral can quickly add up to a massive price tag, which can be difficult to pay for, especially for a grieving family dealing with the loss of someone close to them. Having a burial insurance policy will provide your family with the funds they need to cover the cost of your final expenses without adding any extra stress to the already stressful time.
Advantages of a Burial Life Insurance Plan
There are plenty of benefits to purchasing a burial insurance policy. One of those you can’t put a price on “peace of mind”. Having a policy will give you and your loved one a sense of peace knowing that if anything were to happen to you, they would not be strained to find money to give you the final respect you deserve.
Burial insurance plans are an excellent option for any applicant that cannot be accepted for traditional life insurance plans. Many people with poor health are not eligible to be covered under a life insurance policy, and even those that can be accepted must pay outrageous monthly premiums that can quickly drain a bank account. So instead of having to pay these ridiculous monthly payments, you can opt to pay the lower costs of a burial insurance policy.
Burial insurance is also a good alternative for elderly. Burial insurance for elderly is becoming a more common choice as life insurance premiums continue to rise. The older the applicant is, the higher the life insurance fees are going to be, meaning that older applicants are starting to shift towards burial polices instead of traditionally underwritten life insurance to accomplish their coverage needs while not sacrificing their current lifestyle.
Finding a Burial Insurance Plan
Okay, so you’ve decided you want to purchase a burial insurance plan, now what do you do?
The first step is to decide how much you’re going to need for your funeral (I know, that is not the most wonderful dinner conversation to have with your family). Discuss your wishes with your family and loved ones.
Do you want to be buried? Cremated? Shot off into space? Have your ashes compressed into a diamond?
Buried and have a tree grow where you are? Or any of the other unique burial techniques. Your burial wishes will impact the size of the burial insurance policy you’re going to need. After you decided your final wishes, you can begin to estimate what the final cost will be at the end of your life.
After you know much coverage you’ll need, you can start looking for the perfect insurance company for the burial insurance plan. Just about every major insurance company offers burial insurance policies.
Each company will have different rates, coverage amounts, and policy restrictions, meaning that you may have to call several before you find the perfect fit. Be sure to contact several insurance companies before deciding on one, because some companies could have significantly lower rates than others.
You will also need to ask each company if they have a graded death benefits period. A graded death benefit is the amount of time you have to wait before the policy becomes effective. Most policies will have a year or two-year graded death period.
Here are the three different types to compare:
- Level – Level life insurance is the traditional type of insurance coverage. It’s effective immediately and the premiums will never increase. Provides the most amount of coverage of any type of insurance.
- Graded – Two-year waiting period after being accepted. Given to applicants with severe health complications. Less coverage available than with a traditional plan. Limited underwriting.
- Guaranteed – Effective immediately. Can be bought in hours. Drastically lower limit on protection. No underwriting.
For example, if the policy has a two-year graded death benefits period, if something were to happen to you within the first two years after you accept the policy, the insurance company will not pay the face value of the plan. Some companies repay the premiums that have been paid on the plan and others will pay the premiums plus interest.
You should always consider the graded death benefits period before purchasing a burial insurance policy because it could have an impact on your family’s financial future if something were to happen to you.
To apply for a burial insurance plan, you’ll need a few things. You’ll need a photo I.D., payment options like cash or banking information, and the beneficiary’s information. Because you probably won’t need to complete a medical exam, most applications can be done in office, over the phone, or through email.
The application process will only take between an hour or two depending on the company. For most policies, you can be accepted within a few days.
How much does it Cost?
One of the most common questions regarding a burial insurance policy is, “how much is it going to cost?”
Well, the answer depends on several factors.
The first is how large of a policy are you going to get. The larger the policy, the more you are going to pay.
Your monthly payments will also change drastically depending on your age, gender, overall health, and if you use tobacco or not.
There are also different types of life insurance plans that will have varying premiums. Two of the main categories are guaranteed issue while others are simplified issued. The difference between the two types revolves around the application process.
In a guaranteed issue policies, you will not be required to answer ANY medical questions, but with a simplified issue, you will have to complete a minor medical questionnaire.
For anyone with a pre-existing health condition, guaranteed issue policies are an excellent option, but you can expect to pay more for these policies than with ones that have a health exam.
While each company is going to have different rates depending on your situation, we can give you a rough idea of what you can expect to pay for a policy. For a 70-year-old man that doesn’t smoke or use tobacco, you could expect to pay around $100 – $140 every month for a $10,000 policy. While the same $10,000 policy for a female smoker at 75 years old could cost $150 or more every month.
Top 10 Best Burial Insurance Companies This Year
- American National
- Mutual Of Omaha
- United Home Life
- Royal Neighbors
While Gerber is known for their baby products, you should also take a look at them when you’re shopping for burial insurance. Through the years, they have become one of the most popular options for burial insurance because of how well known they are as a company.
Gerber offers guaranteed issue plans, which means that you won’t be declined, regardless of your health or any pre-existing conditions that you have. If you’re between the ages of 50 to 80, then you qualify to purchase one of these plans.
Gerber tends to be one of the most affordable burial insurance companies that you’ll find. They are not perfect, but they do tend to be one of the cheapest plans that you can find, which makes it easy to include them on our list of best companies.
Gerber will sell you guaranteed coverage for values anywhere from $5,000 to $25,000 worth of coverage. That’s one of the biggest disadvantages of the burial insurance policies from Gerber, the small face values. There are plenty of other companies that offer larger plans, but if you don’t need that big of a policy, Gerber can be an excellent option.
While you may not have heard of Foresters Financial, they should be one of the first places that you look when you’re shopping for burial insurance. They have three different burial insurance plans that you can choose from and some excellent riders that are added to their plans. One unique benefit that they offer to their policyholders is that you will be eligible to receive a free basic will and consolations with a lawyer. That’s a perk that you are not going to find with any other insurance company.
Foresters has level and graded benefit plans. The graded benefit plans are offered to applicants that have severe health complications. These plans have a “waiting period” for the first two years, where if you were to pass away, your beneficiary wouldn’t receive the full payout from the plan. Instead, for the first year your family would get around 30% of the plan, and during the second year, they would get 70%. After the first two years, then the burial insurance policy will operate like any other traditional plan.
Foresters has plans for $2,000 all the way up to $35,000 depending on your age. They also have accident death and accelerated living riders that you can attach to your policy to get additional coverage. If you want to get more than just a simple burial insurance plan, Forester is a great place to start your search.
American National has several advantages, but the most notable one is their whole life burial insurance policy, which you can get up to $50,000 worth of coverage. That’s double what a lot of companies offer through their plans. They also have some graded benefit plans that have up to $25,000 worth of insurance protection.
Because American national sells whole life burial plans, the policy will build cash value. The longer that you hold the policy, the more value that’s built up inside of the plan. You can use that to borrow against if you need a loan in the future.
An additional benefit from American National is that any policy that is over $25,000 comes with a terminal illness rider attached to the plan. These riders can be a life saver if you’re ever diagnosed with a severe illness and need to access your money early.
Assurity is another company that should always be included on a list of best burial insurance companies. They have excellent underwriting standard. Assurity will give you a level benefit policy when other companies are going to require that you purchase a graded benefit policy.
When you apply for burial insurance, most companies are going to look two years in the past to look for any major health problems, but Assurity is only going to go back one year. Depending on your situation, this could make a huge difference. For example, if you had a heart attack 16 months ago, other companies will give you graded benefit, but Assurity will give you their standard plan.
Not only are the more liberal with their underwriting, but they also have some of the best rates for their plans. Because they have more lenient underwriting, if you’re an applicant with severe health complications, you can get much better rates with Assurity versus what you would get from a different company.
Transamerica has a lot of the same benefits of the other companies on this list, like great underwriting and good premium rates, but they also have an excellent plan option, their Preferred Immediate solution policy.
Their Preferred Immediate Solution policy does not have a waiting period and the rates of this plan are going to be lower than other companies that give you coverage without the graded benefit. Transamerica created this plan for the purpose of giving high-risk applicants the burial insurance that they need without the dreaded waiting period that most companies require. Because this plan is specialized to people with severe health complication, they make it a goal to offer better rates.
Sagicor has an excellent A- rating from A.M. Best and they continue to be one of the best options for burial insurance on the market. One of the unique advantages of Sagicor is that they have three different rate classes for their plans. The use preferred, standard, and table rated. Most burial insurance companies only have one rating class. With more rating classes, that will give you a much better chance of getting lower insurance premiums, which means more money in your pockets.
Sagicor offers a No Lapse Universal Life that you can purchase up to $25,000. As you can guess from the name of the plan, these policies will never expire, which means that you won’t have to worry about losing insurance protection. Sagicor includes accelerated benefit rider that will cover any chronic illness at no cost.
As long as you’re between the ages of 18 – 65, you can get one of these plans as a simplified issue, which means that they are not going to ask extensive questions about your health. If you’re between the ages of 66 – 85, then you’ll have to go through the medical underwriting.
Mutual of Omaha
Mutual of Omaha is one of the most popular options for burial insurance on our list. They are one of the most recognizable companies. They have years and years of experience offering quality life insurance to millions of people across the nation. While they have been selling traditional life insurance plans for years, they also have great options for burial insurance plans as well.
These plans are available for anyone between the ages of 45 – 85 and they have whole life plans that you can get for up to $40,000 worth of insurance. In addition to the affordable options for burial insurance, they also have an accelerated death rider that comes with all of their plans.
United Home Life
United Home Life is one of the lesser known companies, but they have a great option for burial insurance that works well for a lot of our clients. As a whole, United Home Life is a reputable company with great rates and excellent customer service. They have four different burial insurance plans that you can choose from, but some of them are not even worth the time it would take you to look at them. The one plan that we are going to focus on is their Express Issue Premier policy.
United Home Life’s Express Issue Premier policy is great for anyone that has a serious health complication like diabetes or Parkinson’s. Most companies are going to grade your benefits if you’ve been diagnosed with Parkinson’s disease, but not United. They will still give you their traditional plan.
Additionally, if you’re looking to get one of the largest burial insurance plans available, you’ve come to the right place. Depending on your age, you can get up to $100,000 worth of burial insurance through United. As long as you’re between the ages of 20 – 80, you’ll qualify for one of their plans, and they tend to be one of the most affordable companies that you can find.
You may not have heard of Royal Neighbors of America, but they are a popular choice for burial insurance. Royal Neighbors is not new to the insurance market. They have been around for more than 120 years, which means they probably aren’t going anywhere.
There are two different burial insurance plans, the Simplified Issue Whole Life and Graded Death Benefit Whole Life.
Their plans are available for anyone from the ages of 65-85. They are whole life plans, and the premiums are not going to increase. One benefit you get with Royal Neighbors is the accelerated living benefit rider.
This rider allows you to get a portion of your insurance benefit while you’re still alive. With Royal Neighbors, you can get up to 75% of their face value while you’re still alive.
AIG is one of the most well-known insurance companies out there, but a lot of customers don’t know about their burial insurance plans.
AIG has an interesting history. They were established in 1919, in China. They didn’t make it to America until several years later in 1926.
AIG has a lot of options for life insurance, and that includes burial insurance. You can buy burial insurance through AIG in either term coverage or whole life. Their plans range from $5,000 to $25,000. All of their burial plans are guaranteed issue, meaning as long as you’re between the ages of 50 and 85, you won’t be rejected.
AIG adds in a few riders for free with their burial insurance policies. They add both terminal illness and chronic illness riders. The terminal illness rider pays out 50% of the face value if you’re diagnosed with any illness which your physician believes is “reasonably expected to result in death within 24 months from the date of certification”.
The chronic illness rider will can be used if the policyholder can no longer perform two of the sex daily living activities. This could be bathing, dressing, eating, and much more. If this happens, the policyholder can get the premiums returned.
Should I consider a Burial Policy?
So now that you know all the information, should you consider purchasing a burial insurance policy? Finale expense insurance policies aren’t necessary for every family, but some individuals can benefit from them. While each person’s situation is different, there are a few cases that burial insurance plans work best.
Senior citizens that have been denied traditional coverage could still be accepted for a funeral insurance plan. These plans make excellent resources for consumers that are too old or in too poor of health for any other forms of insurance. If you can’t receive traditional life insurance coverage for seniors, you can always apply for a guaranteed burial plan, which can give you the coverage you need.
Burial plans are also ideal for anyone with life insurance because they cannot afford it or have no other way of paying for a funeral. Many people cannot afford the monthly premiums of a life insurance policy, especially consumers without perfect help. Burial insurance is the affordable alternative that could save you hundreds of dollars every year.
If you have little money save, but a lot of debt then finding a burial insurance policy could be the best idea. Nobody wants to leave their family with their debt after they die, having one of these policies can prevent that. Most policies will be around $100 or less every month, which is considerably less than most individuals have in credit card debt.
Making sure your family has the money to cover all of your funeral expenses is the last gift you will give to them, showing how much you care for their financial well being. Burial insurance is easy to apply for, easy to be accepted, and affordable for just about every family. Receiving a quote only takes a few minutes. Don’t wait any longer to give your family the peace of mind that they need and you want.
It isn’t going to be the most fun conversation you have but talk to your loved ones about your funeral and all the final expenses they could be left with. Don’t let your family become one of the thousands that inherit debt that they can’t pay for.
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